Investment bankers and other major financial players are increasingly interested in taking control of water and sewer services across the United States. Private equity vehicles are armed with more than $100 billion for infrastructure worldwide. Although most deals in the U.S. water utility market have involved existing private sector companies, a number of fund managers anticipate that the ongoing fiscal crisis will drive some governments to privatize their water infrastructure. To make that prediction a reality, major financial interests are backing various government proposals that facilitate privatization and private financing of public infrastructure.
This is an alarming development. Private equity players typically focus on short-term profits and may seek to flip assets after driving down service quality and driving up prices. Households and businesses could end up paying more for inferior service.